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Is selling only shares you bought with margin on a margin/unsettled cash purchase free ride?

I'm not 100% sure, but I don't think it would be considered a free ride. The idea of a free ride is that you are engaging in a transaction when you do not actually have the money available to cover it, since the broker is technically giving you a 3 day loan whenever you purchase your stock (3 day rule to settle.) However, if you are using a margin account, and you have enough credit available, then you are not actually using unsettled assets, but rather an additional line of credit which was granted to you. You would just need to make sure that your total transactions are less than your purchasing power. That's my take on it anyway. I hope that helps, and hopefully someone can confirm or reject what I have said.

Technical Analysis: the concepts of overbought / oversold don't make sense

Investopedia's explanation of overbought: An asset that has experienced sharp upward movements over a very short period of time is often deemed to be overbought. Determining the degree in which an asset is overbought is very subjective and can differ between investors. Technicians use indicators such as the relative strength index, the stochastic oscillator or the money flow index to identify securities that are becoming overbought. An overbought security is the opposite of one that is oversold. Something to consider is the "potential buyers" and "potential sellers" of a stock. In the case of overbought, there are many more buyers that have appeared and driven the price to a point that may be seen as "unsustainably high" and thus may well come down soon if one looks at the first explanation. For oversold, consider the flip side of this. A real life scenario here would be to consider airline tickets where a flight may be "overbooked" that could also be seen as "oversold" in that more tickets were sold than seats that are available and thus people will be bumped as not all tickets can be honored in this case. For a stock scenario of "oversold" consider how IPOs work where several buyers have to exist to buy the shares so the investment bank isn't stuck holding them which sends up the price since the amount wanted by the buyers may be more than what can be sold. The price shifts in bringing out more of one side than the other is the point you are missing. In shifting the price up, this attracts more sellers to satisfy the buyers. However, if there is a surge of buyers that flood the market, then there could be a perception that the security is overbought in the sense that there may be few buyers left for the security and thus the price may fall in the near term. If the price is coming down, this attracts more buyers to achieve the other side. The potential part is what you don't see and I wonder if you can imagine this part of the market. The airline example I give as an example as you don't seem to think either side of buying or selling can be overloaded. In the case of an oversold flight, there were more seats sold than available so yes it is possible. Stocks exist in finite quantities as there are only X shares of a company trading at any one time if you look into the concept of a float.

How do I find a good mutual fund to invest 5K in with a moderately high amount of risk?

The "Money 70" is a fine list: http://money.cnn.com/magazines/moneymag/bestfunds/index.html Money magazine is usually more reasonable than the other ones (SmartMoney, Kiplinger's, etc. are in my opinion sillier). If you want a lot of depth, the Morningstar Analyst Picks are useful but you have to pay for a membership which is probably not worth it for now: http://www.morningstar.com/Cover/Funds.aspx (side note: Morningstar star ratings are not useful, I'd ignore those. analyst picks are pretty useful.) Vanguard is a can't-go-too-wrong suggestion. They don't have any house funds that are "bad," while for example Fidelity has some good ones mixed with a bunch that aren't so much. Of course, some funds at Vanguard may be inappropriate for your situation. (Vanguard also sells third-party funds, I'm talking about their own branded funds.) If getting started with 5K I think you'd want to go with an all-in-one fund like a target date retirement fund or a balanced fund. Such a fund also handles rebalancing for you. There's a Vanguard target date fund and balanced fund (Wellington) in the Money 70 list. fwiw, I think it's more important to ask how much risk you need to take, rather than how much you are willing to take. I wrote this down at more length here: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ First pick your desired asset allocation, then pick your fund after that to match. Good luck.

Taking Losses To Save On Tax

No, if you are taking a loss solely and purely to reduce the tax you have to pay, then it is not a good strategy, in fact it is a very bad strategy, no matter what country you are in. No investment choice should be made solely due to your tax consequeses. If you are paying tax that means you made a profit, if you made a loss just to save some tax then you are loosing money. The whole point of investing is to make money not lose it.

What are dividends, when are they paid, and how do they affect my position?

Dividends are normally paid in cash, so don't generally affect your portfolio aside from a slight increase to 'cash'. You get a check for them, or your broker would deposit the funds into a money-market account for you. There is sometimes an option to re-invest dividends, See Westyfresh's answer regarding Dividend Re-Investment Plans. As Tom Au described, the dividends are set by the board of directors and announced. Also as he indicated just before the 'record' date, a stock which pays dividends is worth slightly more (reflecting the value of the dividend that will be paid to anyone holding the stock on the record date) and goes down by the dividend amount immediately after that date (since you'd now have to hold the stock till the next record date to get a dividend) In general unless there's a big change in the landscape (such as in late 2008) most companies pay out about the same dividend each time, and changes to this are sometimes seen by some as 'indicators' of company health and such news can result in movement in the stock price. When you look at a basic quote on a ticker symbol there is usually a line for Div/yeild which gives the amount of dividend paid per share, and the relative yeild (as a percentage of the stock price). If a company has been paying dividends, this field will have values in it, if a company does not pay a dividend it will be blank or say NA (depending on where you get the quote). This is the easiest way to see if a company pays a dividend or not. for example if you look at this quote for Google, you can see it pays no dividend Now, in terms of telling when and how much of a dividend has been paid, most financial sites have the option when viewing a stock chart to show the dividend payments. If you expand the chart to show at least a year, you can see when and how much was paid in terms of dividends. For example you can see from this chart that MSFT pays dividends once a quarter, and used to pay out 13 cents, but recently changed to 16 cents. if you were to float your mouse over one of those icons it would also give the date the dividend was paid.

About dividend percentage

Dividend prices are per share, so the amount that you get for a dividend is determined by the number of shares that you own and the amount of the dividend per share. That's all. People like to look at dividend yield because it lets them compare different investments; that's done by dividing the dividend by the value of the stock, however determined. That's the percentage that the question mentions. A dividend of $1 per share when the share price is $10 gives a 10% dividend yield. A dividend of $2 per share when the share price is $40 gives a 5% dividend yield. If you're choosing an investment, the dividend yield gives you more information than the amount of the dividend.

Shorting versus selling to hedge risk

The point of short-selling as a separate instrument is that you can you do it when you can't sell the underlying asset... usually because you don't actually own any of it and in fact believe that it will go down. Shorting allows you to profit from a falling price. Another (non-speculative) possibility is that you don't have the underlying asset right now (and thus can't sell it) but will get it at a certain point in the future, e.g. because it's bonds that you've used to guarantee a loan... or grain that's still growing on your fields.

Is it possible to trade CFD without leverage?

You can but there is no point trading CFD's seeing you may still lose more than your investment due to slippage

How do share buybacks work?

The short version of JB King's excellent answer is that the company will typically buy back shares from the open market at market price. Sometimes, it will specifically target larger stakeholders, even controlling interests, who are making noise that they want to divest; if such an investor were to just dump their stock on the open market, neither the investor nor the company would be very happy with the resulting price collapse. In those cases, the company may offer an incentive price above market rates. In recent times, the investor looking to divest has often been the U.S. Government, who received stock in return for bailouts, and (with notable exceptions) turned a modest profit on many of them. Not enough to break even on the entire bailout, but the Government didn't just throw $700 billion in taxpayer money down a hole as conservative pundits would have you believe. In the '80s, a specific type of buy-back was made famous, called the "leveraged buyout". Basically, the company took out a huge loan against itself, and used that money to buy up all the company's publicly-traded shares, essentially becoming a private company. This became a popular tool among private equity groups, for better and worse.

Pros and cons of bond ETF versus traditional bond mutual fund?

Bond ETFs are just another way to buy a bond mutual fund. An ETF lets you trade mutual fund shares the way you trade stocks, in small share-size increments. The content of this answer applies equally to both stock and bond funds. If you are intending to buy and hold these securities, your main concerns should be purchase fees and expense ratios. Different brokerages will charge you different amounts to purchase these securities. Some brokerages have their own mutual funds for which they charge no trading fees, but they charge trading fees for ETFs. Brokerage A will let you buy Brokerage A's mutual funds for no trading fee but will charge a fee if you purchase Brokerage B's mutual fund in your Brokerage A account. Some brokerages have multiple classes of the same mutual fund. For example, Vanguard for many of its mutual funds has an Investor class (minimum $3,000 initial investment), Admiral class (minimum $10,000 initial investment), and an ETF (share price as initial investment). Investor class has the highest expense ratio (ER). Admiral class and the ETF generally have much lower ER, usually the same number. For example, Vanguard's Total Bond Market Index mutual fund has Investor class (symbol VBMFX) with 0.16% ER, Admiral (symbol VBTLX) with 0.06% ER, and ETF (symbol BND) with 0.06% ER (same as Admiral). See Vanguard ETF/mutual fund comparison page. Note that you can initially buy Investor class shares with Vanguard and Vanguard will automatically convert them to the lower-ER Admiral class shares when your investment has grown to the Admiral threshold. Choosing your broker and your funds may end up being more important than choosing the form of mutual fund versus ETF. Some brokers charge very high purchase/redemption fees for mutual funds. Many brokers have no ETFs that they will trade for free. Between funds, index funds are passively managed and are just designed to track a certain index; they have lower ERs. Actively managed funds are run by managers who try to beat the market; they have higher ERs and tend to actually fall below the performance of index funds, a double whammy. See also Vanguard's explanation of mutual funds vs. ETFs at Vanguard. See also Investopedia's explanation of mutual funds vs. ETFs in general.

What is the opposite of a hedge?

I guess the opposite of being hedged is being unhedged. Typically, a hedge is an additional position that you would take on in order to mitigate the potential for losses on another position. I'll give an example: Say that I purchase 100 shares of stock XYZ at $10 per share because I believe its price will increase in the future. At that point, my full investment of $1000 is at risk, so the position is not hedged. If the price of XYZ decreases to $8, then I've lost $200. If the price of XYZ increases to $12, then I've gained $200; the profit/loss curve has a linear relationship to the future stock price. Suppose that I decide to hedge my XYZ position by purchasing a put option. I purchase a single option contract (corresponding to my 100 shares) with a strike price of $10 and an expiration date in January 2013 for a price of $0.50/share. This means that until the contract expires, I can always sell my XYZ shares for a minimum of $10. Therefore, if the price of XYZ decreases to $8, then I've only lost $50 (the price of the option contract), compared to the $200 that I would have lost if the position was unhedged. Likewise, however, if the price increases to $12, then I've only gained a net total of $150 due to the money I spent on the hedge. (the details of how much money you would actually lose in the hedged scenario are simplified out above; even out-of-the-money options retain some value before expiration, but pricing of options is outside of the scope of this post) So, as a more pointed answer to your question, I would say that the hedged/unhedged status of a position can be characterized by its potential for loss. If you don't have any other assets that will increase in value to offset losses on your position of interest, I would call it unhedged.

Buying an option in the money, at the money, or out of the money

1 reason is Leverage.... If you are buying out of the money options you get much more bang for your buck if the stock moves in your favor. The flipside is it is much more likely that you would lose all of your investment.

Investments - Huge drop in bid price versus last close

Depends on when you are seeing these bids & asks-- off hours, many market makers pull their bid & ask prices entirely. In a lightly traded stock there may just be no market except during the regular trading day.

How (or is it necessary) to rebalance a 401k with only one index fund?

There's nothing to rebalance, the index fund rebalances itself to continue matching the index. However, you need to understand that such an investment is not diversified and you only invest in a very specific market, and very specific stocks on that market. S&P 500 is large (500 different companies, most of the time), but still not as broadly diversified as your retirement investment portfolio should be. You should talk to a financial adviser (CFP for example), many companies provide access to these for 401k plan participants. But in any case, I'd suggest considering "target date" funds - funds that are investing based on your expected retirement year, and become more conservative as you get closer to that year.

Can buying REIT's be compared to investing in Real Estate?

well yes but you should also begin to understand the sectoral component of real estate as a market too in that there can be commercial property; industrial property and retail property; each of which is capable of having slightly (tho usually similar of course) different returns, yields, and risks. Whereas you are saving to buy and enter into the residential property market which is different again and valuation principles are often out of kilter here because Buying a home although exposing your asset base to real estate risk isnt usually considered an investment as it is often made on emotional grounds not strict investment criteria.

Tax treatment of dividends paid on short positions

In the USA there are two ways this situation can be treated. First, if your short position was held less than 45 days. You have to (when preparing the taxes) add the amount of dividend back to the purchase price of the stock. That's called adjusting the basis. Example: short at $10, covered at $8, but during this time stock paid a $1 dividend. It is beneficial for you to add that $1 back to $8 so your stock purchase basis is $9 and your profit is also $1. Inside software (depending what you use) there are options to click on "adjust the basis" or if not, than do it manually specifically for those shares and add a note for tax reviewer. Second option is to have that "dividednd payment in lieu paid" deducted as investment expence. But that option is only available if you hold the shorts for more than 45 days and itemize your deductions. Hope that helps!

Get financial reports on Canadian companies

www.sedar.com is the official site that provides access to most public securities documents and information filed by public companies and investment funds with the Canadian Securities Administrators (CSA) in the SEDAR filing system. Now, I'm guessing - I think the doc is MDA - Management’s Discussion and Analysis of Financial Condition and Results of Operations. At least this is what appears listed for many companies.

How can I find a report of dividend earned in a FY?

I know this question is old. I also have a kotak trading account. There is no way to get the dividend report from the trading account. The dividend is directly credited to your bank account by the companies through registrar. There is no involvement of trading account in there. So the best possible way will be to get the bank account statement for the financial year and filter out the dividend transactions manually. I know it is tedious, but there doesn't seem to be any easy way out there for this. Few days back I started using portfolio manager provided by economic times. It lists all the dividend earned in my stocks automatically.

Pay off mortgage or invest in high value saving account

Basically, the easiest way to do this is to chart out the "what-ifs". Applying the amortization formula (see here) using the numbers you supplied and a little guesswork, I calculated an interest rate of 3.75% (which is good) and that you've already made 17 semi-monthly payments (8 and a half months' worth) of $680.04, out of a 30-year, 720-payment loan term. These are the numbers I will use. Let's now suppose that tomorrow, you found $100 extra every two weeks in your budget, and decided to put it toward your mortgage starting with the next payment. That makes the semi-monthly payments $780 each. You would pay off the mortgage in 23 years (making 557 more payments instead of 703 more). Your total payments will be $434,460, down from $478.040, so your interest costs on the loan were reduced by $43,580 (but, my mistake, we can't count this amount as money in the bank; it's included in the next amount of money to come in). Now, after the mortgage is paid off, you have $780 semi-monthly for the remaining 73 months of your original 30-year loan (a total of $113,880) which you can now do something else with. If you stuffed it in your mattress, you'd earn 0% and so that's the worst-case scenario. For anything else to be worth it, you must be getting a rate of return such that $100 payments, 24 times a year for a total of 703 payments must equal $113,880. We use the future value annuity formula (here): v = p*((i+1)n-1)/i, plugging in v ($113880, our FV goal), $100 for P (the monthly payment) and 703 for n (total number of payments. We're looking for i, the interest rate. We're making 24 payments per year, so the value of i we find will be 1/24 of the stated annual interest rate of any account you put it into. We find that in order to make the same amount of money on an annuity that you save by paying off the loan, the interest rate on the account must average 3.07%. However, you're probably not going to stuff the savings from the mortgage in your mattress and sleep on it for 6 years. What if you invest it, in the same security you're considering now? That would be 146 payments of $780 into an interest-bearing account, plus the interest savings. Now, the interest rate on the security must be greater, because you're not only saving money on the mortgage, you're making money on the savings. Assuming the annuity APR stays the same now vs later, we find that the APR on the annuity must equal, surprise, 3.75% in order to end up with the same amount of money. Why is that? Well, the interest growing on your $100 semi-monthly exactly offsets the interest you would save on the mortgage by reducing the principal by $100. Both the loan balance you would remove and the annuity balance you increase would accrue the same interest over the same time if they had the same rate. The main difference, to you, is that by paying into the annuity now, you have cash now; by paying into the mortgage now, you don't have money now, but you have WAY more money later. The actual real time-values of the money, however, are the same; the future value of $200/mo for 30 years is equal to $0/mo for 24 years and then $1560/mo for 6 years, but the real money paid in over 30 years is $72,000 vs $112,320. That kind of math is why analysts encourage people to start retirement saving early. One more thing. If you live in the United States, the interest charges on your mortgage are tax-deductible. So, that $43,580 you saved by paying down the mortgage? Take 25% of it and throw it away as taxes (assuming you're in the most common wage-earner tax bracket). That's $10895 in potential tax savings that you don't get over the life of the loan. If you penalize the "pay-off-early" track by subtracting those extra taxes, you find that the break-even APR on the annuity account is about 3.095%.

IS it the wrong time to get into the equity market immediately after large gains?

Past results are not a predictor of future results. There is no explicit upper bound on a market, and even if individual companies' values were remaining unchanged one would expect the market to drift upward in the long term. Plus, there's been some shift from managing companies for dividends to managing stocks for growth, which will tend to increase the upward push. Trying to time the market -- to guess when it's going to move in any particular direction -- is usually closer to gambling than investing. The simplest answer remains a combination of buy-and-hold and dollar-cost averaging. Buy at a constant number of dollars per month (or whatever frequency you prefer), and you will automatically buy more when the stock/fund is lower, less when it is higher. That takes advantage of downturns as buying opportunities without missing out on possible gains at the other end. Personally, I add a bit of contrarian buying to that -- I increased my buying another notch or two while the market was depressed, since I had money I wouldn't need any time soon (buy and hold) and I was reasonably confident that enough of the market would come back strongly enough that I wasn't at significant risk of losing the investment. That's one of the things which causes me to be categorized as an "aggressive investor" even though I'm operating with a very vanilla mix of mutual funds and not attempting to micromanage my money. My goal is to have the money work for me, not vice versa.

What is the best and most optimal way to use margin

This essentially depends on how you prefer to measure your performance. I will just give a few simple examples to start. Let me know if you're looking for something more. If you just want to achieve maximum $ return, then you should always use maximum margin, so long as your expected return (%) is higher than your cost to borrow. For example, suppose you can use margin to double your investment, and the cost to borrow is 7%. If you're investing in some security that expects to return 10%, then your annual return on an account opened with $100 is: (2 * $100 * 10% - $100 * 7%) / $100 = 13% So, you see the expected return, amount of leverage, and cost to borrow will all factor in to your return. Suppose you want to also account for the additional risk you're incurring. Then you could use the Sharpe Ratio. For example, suppose the same security has volatility of 20%, and the risk free rate is 5%. Then the Sharpe Ratio without leverage is: (10% - 5%) / 20% = 0.25 The Sharpe Ratio using maximum margin is then: (13% - 5%) / (2 * 20%) = 0.2, where the 13% comes from the above formula. So on a risk-adjusted basis, it's better not to utilize margin in this particular example.

Does lender care what I use the money for?

When you borrow from a bank, there are secured loans, as with a mortgage, or unsecured lines of credit, usually a more reasonable amount of money, but also based on income. You just asked about a private loan. It depends on the person and your relationship. If you need money to pay the rent, you might not be the best person to lend money to. If you ask a friend or relative, they may lend you money without asking its purpose.

Can I get a dumbed down explanation of risk measures used for evaluating stocks?

Standard deviation from Wikipedia : In statistics and probability theory, the standard deviation (represented by the Greek letter sigma, σ) shows how much variation or dispersion from the average exists.1 A low standard deviation indicates that the data points tend to be very close to the mean (also called expected value); a high standard deviation indicates that the data points are spread out over a large range of values. In the case of stock returns, a lower value would indicate less volatility while a higher value would mean more volatility, which could be interpreted as high much change does the stock's price go through over time. Mean would be interpreted as if all the figures had to be the same, what would they be? So if a stock returns 10% each year for 3 years in a row, then 10% would be the mean or average return. Now, it is worth noting that there are more than a few calculations that may be done to derive a mean. First, there is the straight forward sum and division by the number of elements idea. For example, if the returns by year were 0%, 10%, and 20% then one may take the sum of 30% and divide by 3 to get a simple mean of 10%. However, some people would rather look at a Compound Annual Growth Rate which in this case would mean multiplying the returns together so 1*(1+.1)*(1+.2)=1.1*1.2=1.32 or 32% since there is some compounding here. Now, instead of dividing a cubic root is taken to get approximately 9.7% average annual return that is a bit lower yet if you compound it over 3 years it will get up to 32% as 10% compounded over 3 years would be 33.1% as (1.1)^3=1.331. Sharpe Ratio from Investopedia: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. Thus, this is a way to think about given the volatility how much better did the portfolio do than the 10 year bond. R-squared, Alpha and Beta: These are all around the idea of "linear regression" modelling. The idea is to take some standard like say the "S & P 500" in the case of US stocks and see how well does the portfolio follow this and what if one were to use a linear model are the multipliers and addition components to it. R-squared can be thought of it as a measure as to how good is the fit on a scale of 0 to 1. An S & P 500 index fund may well have an R-squared of 1.00 or 0.99 to the index as it will track it extremely closely while other investments may not follow that well at all. Part of modern portfolio theory would be to have asset classes that move independently of each other and thus would have a lower R-squared so that the movement of the index doesn't indicate how an investment will do. Now, as for alpha and beta, do you remember the formula for a line in slope-intercept form, where y is the portfolio's return and x is the index's return: y=mx+b In this situation m is beta which is the multiple of the return, and b is the alpha or how much additional return one gets without the multiple. Going back to an index fund example, m will be near 1 and b will be near 0 and there isn't anything being done and so the portfolio's return computed based on the index's return is simply y=x. Other mutual funds may try to have a high alpha as this is seen as the risk-free return as there isn't the ups and downs of the market here. Other mutual funds may go for a high beta so that there is volatility for investors to handle.

How do credit union loans and dividends vs interest work?

A credit Union makes loans exactly the same ways a bank does. A portion of the money deposited in checking, savings, money market, Certificate of Deposit, or IRA is then used to make loans for cars, boats, school, mortgages, 2nd mortgages, lines of credit... The government dictates the percentage of each type of deposit that must be held in reserve for non-loan transactions. The Credit Union members are the share holders of the "company". There are no investors in the "company" because the goal is not to make money. In general the entire package is better because there is no pressure to increase profits. Fees are generally lower because they are there to discourage bad behavior, not as a way to make a profit off of the bad behavior. Dividends/interest are treated the same way as bank interest. The IRS forms are the same, and it is reported the same way. Some of bizarre rules they have to follow: maximum number of transactions between accounts, membership rules, are there because banks want to make it harder to be a member of a credit union.

Main source of the shares/stocks data on the web

The main source is a direct feed from the stock market itself. The faster the feed, the more expensive. 15-minute delay is essentially free... and for those of us who do long-term investment is more than adequate. If you want data sooner, sign up with a brokerage that provides that service as part of what you're paying them for... and remember that every bit you spend on services is that much more profit you have to make just to break even, so there's a real tradeoff.

Medium-term money investment in Germany

Due to the zero percent interest rate on the Euro right now you won't find any investment giving you 5% which isn't equivalent to gambling. One of the few investment forms which still promises gains without unreasonable risks right now seems to be real estate, because real estate prices in German urban areas (not so in rural areas!) are growing a lot recently. One reason for that is in fact the low interest rate, because it makes it very cheap right now to take a loan and buy a home. This increased demand is driving up the prices. Note that you don't need to buy a property yourself to invest in real estate (20k in one of the larger cities of Germany will get you... maybe a cardboard box below a bridge?). You can invest your money in a real estate fund ("Immobilienfond"). You then don't own a specific property, you own a tiny fraction of a whole bunch of different properties. This spreads out the risk and allows you to invest exactly as much money as you want. However, most real estate funds do not allow you to sell in the first two years and require that you announce your sale one year in advance, so it's not a very liquid asset. Also, it is still a risky investment. Raising real estate prices might hint to a bubble which might burst eventually. Financial analysts have different opinions about this. But fact is, when the European Central Bank starts to take interest again, then the demand for real estate property will drop and so will the prices. When you are not sure what to do, ask your bank for investment advise. German banks are usually trustworthy in this regard.

How can I invest in US Stocks from outside the US with a credit card instead of a bank account?

You'll have to take cash from your Credit Card account and use that to trade. I doubt any brokerage house will take credit cards as it's trading without any collateral (since credit cards are an unsecured credit)

How to tell if an option is expensive

An option, by definition, is a guess about the future value of the stock. If you guess too aggressively, you lose the purchase price of the option; if you guess too conservatively, you may not take the option or may not gain as much as you might have. You need to figure out what you expect to happen, and how confident you are about it, against the cost of taking the option -- and be reasonably confident that the change in the stock's value will be at least large enough to cover the cost of buying into the game. Opinion: Unless you're comfortable with expectation values and bell curves around them, it's significantly easier to lose money on options than to profit on them. And I'm not convinced that even statisticians can really do this well. I've always been told that the best use for options is hedging an investment you've already made; treating them as your primary bet is gambling, not investment.

How to record a written put option in double-entry accounting?

Because you've sold something you've received cash (or at least an entry on your brokerage statement to say you've got cash) so you should record that as a credit in your brokerage account in GnuCash. The other side of the entry should go into another account that you create called something like "Open Positions" and is usually marked as a Liability account type (if you need to mark it as such). If you want to keep an accurate daily tally of your net worth you can add a new entry to your Open Positions account and offset that against Income which will be either negative or positive depending on how the position has moved for/against you. You can also do this at a lower frequency or not at all and just put an entry in when your position closes out because you bought it back or it expired or it was exercised. My preferred method is to have a single entry in the Open Positions account with an arbitrary date near when I expect it to be closed and each time I edit that value (daily or weekly) so I only have the initial entry and the current adjust to look at which reduces the number of entries and confusion if there are too many.

Investment Portfolio Setup for beginner

Some thoughts: 1) Do you have a significant emergency fund (3-6 months of after-tax living expenses)? If not, you stand to take a significant loss if you have an unexpected need for cash that is tied up in investments. What if you lose/hate your job or your car breaks down? What if a you want to spend some time with a relative or significant other who learns they only have a few months to live? Having a dedicated emergency fund is an important way to avoid downside risk. 2) Lagerbaer has a good suggestion. Given that if you'd reinvested your dividends, the S&P 500 has returned about 3.5% over the last 5 years, you may be able to get a very nice risk-free return. 3) Do you have access to employer matching funds, such as in a 401(k) at work? If you get a dollar-for-dollar match, that is a risk-free pre-tax 100% return and should be a high priority. 4) What do you mean by "medium" volatility? Given that you are considering a 2/3 equity allocation, it would not be at all out of the realm of possibility that your balance could fall by 15% or more in any given year and take several years to recover. If that would spook you, you may want to consider lowering your equity weights. A high quality bond fund may be a good fit. 5) Personally, I would avoid putting money into stocks that I didn't need back for 10 years. If you only want to tie your money up for 2-5 years, you are taking a significant risk that if prices fall, you won't have time to recover before you need your money back. The portfolio you described would be appropriate for someone with a long-term investment horizon and significant risk tolerance, which is usually the case for young people saving for retirement. However, if your goals are to invest for 2-5 years only, your situation would be significantly different. 6) You can often borrow from an investment account to purchase a primary residence, but you must pay that amount back in order to avoid significant taxes and fees, unless you plan to liquidate assets. If you plan to buy a house, saving enough to avoid PMI is a good risk-free return on your money. 7) In general, and ETF or index fund is a good idea, the key being to minimize the compound effect of expenses over the long term. There are many good choices a la Vanguard here to choose from. 8) Don't worry about "Buy low, sell high". Don't be a speculator, be an investor (that's my version of Anthony Bourdain's, "don't be a tourist, be a traveler"). A speculator wants to sell shares at a higher price than they were purchased at. An investor wants to share in the profits of a company as a part-owner. If you can consistently beat the market by trying to time your transactions, good for you - you can move to Wall Street and make millions. However, almost no one can do this consistently, and it doesn't seem worth it to me to try. I don't mean to discourage you from investing, just make sure you have your bases covered so that you don't have to cash out at a bad time. Best of luck! Edit Response to additional questions below. 1) Emergency fund. I would recommend not investing in anything other than cash equivalents (money market, short-term CDs, etc.) until you've built up an emergency fund. It makes sense to want to make the "best" use of your money, but you also have to account for risk. My concern is that if you were to experience one or more adverse life events, that you could lose a lot of money, or need to pay a lot in interest on credit card debt, and it would be prudent to self-insure against some of those risks. I would also recommend against using an investment account as an emergency fund account. Taking money out of investment accounts is inefficient because the commissions/taxes/fees can easily eat up a significant portion of your returns. Ideally, you would want to put money in and not touch it for a long time in order to take advantage of compounding returns. There are also high penalties for early disbursements from retirement funds. Just like you need enough money in your checking account to buy food and pay the rent every month, you need enough money in an emergency fund to pay for things that are a real possibility, even if they are less common. Using a credit card or an investment account is a relatively expensive way to do this. 2) Invest at all? I would recommend starting an emergency fund, and then beginning to invest for retirement. Once your retirement savings are on track, you can begin saving for whatever other goals you may have

Where are Bogleheadian World ETFs or Index funds?

You weren't really clear about where you are in the world, what currency you are using and what you want your eventual asset allocation to be. If you're in the US, I'd recommend splitting your international investment between a Global ex-US fund like VEU (as Chris suggested in his comment) and an emerging markets ETF like VWO. If you're not in the US, you need to think about how much you would like to invest in US equities and what approach you would like to take to do so. Also, with international funds, particularly emerging markets, low expense ratios aren't necessarily the best value. Active management may help you to avoid some of the risks associated with investing in foreign companies, particularly in emerging markets. If you still want low expenses at all cost, understand the underlying index that the ETF is pegged to.

Who should pay taxes in my typical case?

Once you turn 18 you should open an account in your own name and transfer the assets there. Currently your mom is the one responsible as far as the IRS cares with respect to taxes as it is her name on the account. The taxes due will be based on your mom's tax rate. As a good child you can reimburse your mom for the taxes that she has to on your behalf. Also legally that money currently belongs to her. Any legal judgement against your mom can claim that money and it is not available for using as an asset by you on credit applications and such. A better solution would have been for your mom to open a custodial account in your name. This way the money is still yours (you just don't have control of it until you turn 18). While probably not an issue here, the transferring of money between you and your mom (and then back) is considered a gift by the IRS. If the account was very well funded then you could run into having to deal with the annual gift limit and lifetime gift exclusion. Based on the clarification that the question is in reference to India: while I don't know the particulars of the law in India my advice of transferring the assets when you turn 18 still remains. The main difference that I would see been India and the US would be the gift tax / exclusions. Unless someone else knows otherwise I would still expect the law in India to see the current account as being the property of the mother.

How to start buying shares with small amount of money?

Before anything else, read up on the basics of economics. After that, there a few things you need to ask yourself before you even think about investing in anything: If you have an answer to those questions: Once you answered those questions I could make a simple first suggestion: Confident in handling it yourself and low maintenance with uncertain horizon: look up an online bank that offers ETFs such as IWDA (accumulation (dividend is not payed but reinvested) or income(dividend is payed out)) and maybe a few more specific ones then buy and hold for at least 5 years. Confident and high maintenance with long horizon: maybe stock picking but you'll probably never be able to beat the market unless you invest 10's of hours in research per week. However this will also cost a bit and given your initial amount not advisable to do. Be sure that you also have a VERY close look at the prospectus of an investment (especially if you go with a (retail) bank and they "recommend" you certain actively traded funds). They tend to charge you quite a bit (yearly management fees of 2-3% (which is A LOT if you are eying maybe 7%-8% yearly) aren't unheard of). ETF's such IWDA only have for example a yearly cost of 0.20%. Personally I have one portfolio (of many) only consisting of that ETF (so IWDA) and one global small cap. It's one of the best and most consistant ones to date. In the end, the amount you start with doesn't really matter so much as long as it's enough to buy at least a few shares of what you have in mind. If you can then increase your portfolio over time and keep the expenses in check, compounding interest should do the rest.

What to sell when your financial needs change, stocks or bonds?

Don't set mental anchor points. I am saying this as a total hypocrite, mind you, it isn't easy to follow that advice. My suggestion would be to look at each investment and ask yourself, "Would I buy that at today's price?", because if you wouldn't you need to sell regardless of whether you are cashing out. Effectively by staying in an investment you no longer believe in, you are giving up the opportunity cost of investing that money in something with a real chance to give you a return, or in your case whatever purpose you have in mind for the cash.

First time investor wanting to invest in index funds especially Vanguard

Congratulations on deciding to save money and choosing to invest it. One thing to know about mutual funds including index funds is that they typically require a minimum investment of a few thousand dollars, $3000 being a typical amount, unless the investment is in an IRA in which case $1000 might be a minimum. In some cases, automated monthly investments of $50 or $100 might need to be set up if you are beginning with a small balance. There is nothing wrong with your approach. You now should go and look at the various requirements for specific index funds. The Fidelity and Vanguard families are good choices and both offer very low-cost index funds to choose from, but different funds can have different requirements regarding minimum investments etc. You also have a choice of which index you want to follow, the S&P 500 Index, MidCap Indexes, Small-Cap Indexes, Total Stock Market Indexes etc., but your choice might be limited until you have more money to invest because of minimum investment rules etc. Most important, after you have made your choice, I urge you to not look every day, or even every month, to see how your investment is doing. You will save yourself a lot of anxiety and will save yourself from making wrong decisions. Far too many investors ignore the maxim "Buy Low, Sell High" and pull money out of what should be long-term investments at the first flicker of a downturn and end up buying high and selling low. Finally, the time is approaching when most stock funds will be declaring dividends and capital gains distributions. If you invest now, you may end up with a paper profit on which you will have to pay taxes (in non-tax-advantaged accounts) on your 2012 tax return (this is called "buying a dividend"), and so you might want to spend some time investigating now, but actually make the investment in late December after your chosen fund has made its distributions (the date for this will be on the fund's web site) or in early 2013.

How much should I save up per trade?

I'd answer it this way: What do you want to do? I'd say any amount is acceptable from as low as $100. When you look at the specific "tree" of investing paying $5 for a $100 seems unacceptable. However when observing the "forest" what does it matter if you "waste" $5 on a commission? Your friends (and maybe you) probably waste more than $5 multiple times per day. For them buying a latte might empower them, if buying another share of HD, for a similar cost, empowers you than do it. In the end who will be better off? Studies show that the more important part of building a significant investment portfolio is actually doing it. Rate of return and the cost of investing pales in comparison to actually doing it. How many of your peers are doing similar things? You are probably in very rare company. If it makes you happy, it is a wonderful way to spend your money.

Can you explain why it's better to invest now rather than waiting for the market to dip?

With a long enough time horizon, no matter when you buy, equities almost always outperform cash and bonds. There's an article here with some info: http://www.fool.co.uk/investing-basics/how-when-and-where-to-invest/ Holding period where shares have beaten cash There was a similar study done which showed if you picked any day in the last 100 years, no matter if the market was at a high or low, after 1 year your probability of being in profit was only 0.5, but after 10-20 years it was almost certainly 1.0. Equities compound dividends too, and the best place to invest is in diversified stock indices such as the S&P500, FTSE100, DOW30 or indices/funds which pay dividends. The best way to capture returns is to dollar cost average (e.g. place a lump sum, then add $x every month), to re-invest dividends, and oh, to forget about it in an IRA or SIPP (Self invested pension) or other vehicle which discourages tampering with your investment. Yes, values rise and fall but we humans are so short sighted, if we had bought the S&P in 2007 and sold in 2009 in fear, we would have missed out on the 25% gain (excluding dividends) from 2007-2014. That's about 3% a year gain even if you bought the 2007 high -beating cash or bonds even after the financial crisis. Now imagine had you dollar cost averaged the entire period from 2007-2014 where your gain would be. Your equity curve would have the same shape as the S&P (with its drastic dip in 2009) but an accelerated growth after. There are studies if you dig that demonstrate the above. From experience I can tell you timing the market is nigh impossible and most fund managers are unable to beat the indices. Far better to DCA and re-invest dividends and not care about market gyrations! ..

What percentage of my portfolio should be in individual stocks?

I think it depends entirely on your risk tolerance. Putting money in individual stocks obviously increases your risk and potentially increases your reward. Personally (as a fairly conservative investor) I'd only invest in individual stocks if I could afford to lose the entire investment (maybe I'd end up buying Enron or Nortel). If you enjoy envesting and feel 10% is an acceptable loss I think you have your answer

Using P/E Ratio of an ETF to decide on asset mix

P/E is a useful tool for evaluating the price of a company, but only in comparison to companies in similar industries, especially for industries with well-defined cash flows. For example, if you compared Consolidated Edison (NYSE:ED) to Hawaiian Electric (NYSE:HE), you'll notice that HE has a significantly higher PE. All things being equal, that means that HE may be overpriced in comparison to ED. As an investor, you need to investigate further to determine whether that is true. HE is unique in that it is a utility that also operates a bank, so you need to take that into account. You need to think about what your goal is when you say that you are a "conservative" investor and look at the big picture, not a magic number. If conservative to you means capital preservation, you need to ensure that you are in investments that are diversified and appropriate. Given the interest rate situation in 2011, that means your bonds holding need to be in short-duration, high-quality securities. Equities should be weighted towards large cap, with smaller holdings of international or commodity-associated funds. Consider a target-date or blended fund like one of the Vanguard "Life Strategy" funds.

USA H1B Employee - Capital gains in India from selling selling stocks

My tax preparing agent is suggesting that since the stock brokers in India does not have any US state ITINS, it becomes complicated to file that income along with US taxes Why? Nothing to do with each other. You need to have ITIN (or, SSN more likely, since you're on H1b). What brokers have have nothing to do with you. You must report these gains on your US tax return, and beware of the PFIC rules when you do it. He says, I can file those taxes separately in India. You file Indian tax return in India, but it has nothing to do with the US. You'll have to deal with the tax treaty/foreign tax credits to co-ordinate. How complicated is it to include Indian capital gains along with US taxes? "How complicated" is really irrelevant. But in any case - there's no difference between Indian capital gains and American capital gains, unless PFIC/Trusts/Mutual funds are involved. Then it becomes complicated, but being complicated is not enough to not report it. If PIFC/Trusts/Mutual funds aren't involved, you just report this on Schedule D as usual. Did anybody face similar situation More or less every American living abroad. Also the financial years are different in India and US Irrelevant.

Post tax versus pretax (ESPP versus straight investment)

This answer assumes that your purpose for using the ESPP is to generate a relatively safe 15% return on that portion of your income. Frequently before there were Roth 401K options the advice was: This advice was especially good for the younger workers because they wanted to have a Roth account but didn't want to miss the 401K match. As Roth 401K accounts were introduced that advice changed somewhat because it was possible to get the benefit of the Roth and still get the maximum match. for your situation what I would propose is: contribute to the 401K enough to get the maximum match. Contribute as much as you want or are allowed into the ESPP. Take the proceeds and contribute to an IRA or Roth IRA. If you reach the IRA max you have to decide if you will scale back the ESPP to contribute more to the 401K.

US tax returns for a resident - No US income and indian shares

I'm assuming that by saying "I'm a US resident now" you're referring to the residency determination for tax purposes. Should I file a return in the US even though there is no income here ? Yes. US taxes its residents for tax purposes (which is not the same as residents for immigration or other purposes) on worldwide income. If yes, do I get credits for the taxes I paid in India. What form would I need to submit for the same ? I am assuming this form has to be issued by IT Dept in India or the employer in India ? The IRS doesn't require you to submit your Indian tax return with your US tax return, however they may ask for it later if your US tax return comes under examination. Generally, you claim foreign tax credits using form 1116 attached to your tax return. Specifically for India there may also be some clause in the Indo-US tax treaty that might be relevant to you. Treaty claims are made using form 8833 attached to your tax return, and I suggest having a professional (EA/CPA licensed in your State) prepare such a return. Although no stock transactions were done last year, should I still declare the value of total stocks I own ? If so what is an approx. tax rate or the maximum tax rate. Yes, this is done using form 8938 attached to your tax return and also form 114 (FBAR) filed separately with FinCEN. Pay attention: the forms are very similar with regard to the information you provide on them, but they go to different agencies and have different filing requirements and penalties for non-compliance. As to tax rates - that depends on the types of stocks and how you decide to treat them. Generally, the tax rate for PFIC is very high, so that if any of your stocks are classified as PFIC - you'd better talk to a professional tax adviser (EA/CPA licensed in your State) about how to deal with them. Non-PFIC stocks are dealt with the same as if they were in the US, unless you match certain criteria described in the instructions to form 5471 (then a different set of rules apply, talk to a licensed tax adviser). I will be transferring most of my stock to my father this year, will this need to be declared ? Yes, using form 709. Gift tax may be due. Talk to a licensed tax adviser (EA/CPA licensed in your State). I have an apartment in India this year, will this need to be declared or only when I sell the same later on ? If there's no income from it - then no (assuming you own it directly in your own name, for indirect ownership - yes, you do), but when you sell you will have to declare the sale and pay tax on the gains. Again, treaty may come into play, talk to a tax adviser. Also, be aware of Section 121 exclusion which may make it more beneficial for you to sell earlier.

Definition of day trading

The American "Security Exchange Commission" has imposed a rule upon all stock trading accounts. This rule is "Regulation-T". This rule specifies that stock trading accounts must be permitted three days after the termination of a trade to settle the account. This is just fancy lingo to justify the guarantee that the funds are either transferred out of your account to another persons (the person that made money), or the money flows into your account. A "Day Trader's" account avoids the hassle because you're borrowing money from your broker to trade with and circumvent Reg-T. It's technically not how long you hold the trade that determines if you're a day trader, or not. It's your accounts liquidity and your credit worthiness.

What's the connection between P/E ratio and growth?

So, the price-earnings ratio is price over earnings, easy enough. But obviously earnings are not static. In the case of a growing company, the earnings will be higher in the future. There will be extra earnings, above and beyond what the stock has right now. You should consider the future earnings in your estimate of what the company is worth now. One snag: Those extra earnings are future money. Future-money is an interesting thing, it's actually worth less than present-money- because of things like inflation, but also opportunity cost. So if you bought $100 in money that you'll have 20 years from now, you'd expect to pay less than $100. (The US government can sell you that money. It's called a Series EE Savings Bond and it would cost you $50. I think. Don't quote me on that, though, ask the Treasury.) So you can't compare future money with present-money directly, and you can't just add those dollars to the earnings . You need to compute a discount. That's what discounted cash-flow analysis is about: figuring out the future cash flow, and then discounting the future figuring out what it's worth now. The actual way you use the discount rate in your formula is a little scarier than simple division, though, because it involves discounting each year's earnings (in this case, someone has asserted a discount of 11% a year, and five years of earnings growth of 10%). Wikipedia gives us the formula for the value of the future cash flow: essentially adding all the future cash flows together, and then discounting them by a (compounded) rate. Please forgive me for not filling this formula out; I'm here for theory, not math. :)

Could someone please provide an example of a portfolio similiar to the GFP or Couch potato, but for Australia?

The portfolio described in that post has a blend of small slices of Vanguard sector funds, such as Vanguard Pacific Stock Index (VPACX). And the theory is that rebalancing across them will give you a good risk-return tradeoff. (Caveat: I haven't read the book, only the post you link to.) Similar ETFs are available from Vanguard, iShares, and State Street. If you want to replicate the GFP exactly, pick from them. (If you have questions about how to match specific funds in Australia, just ask another question.) So I think you could match it fairly exactly if you wanted to. However, I think trying to exactly replicate the Gone Fishin Portfolio in Australia would not be a good move for most people, for a few reasons: Brokerage and management fees are generally higher in Australia (smaller market), so dividing your investment across ten different securities, and rebalancing, is going to be somewhat more expensive. If you have a "middle-class-sized" portfolio of somewhere in the tens of thousands to low millions of dollars, you're cutting it into fairly small slices to manually allocate 5% to various sectors. To keep brokerage costs low you probably want to buy each ETF only once every one-two years or so. You also need to keep track of the tax consequences of each of them. If you are earning and spending Australian dollars, and looking at the portfolio in Australian dollars, a lot of those assets are going to move together as the Australian dollar moves, regardless of changes in the underlying assets. So there is effectively less diversification than you would have in the US. The post doesn't mention the GFP's approach to tax. I expect they do consider it, but it's not going to be directly applicable to Australia. If you are more interested in implementing the general approach of GFP rather than the specific details, what I would recommend is: The Vanguard and superannuation diversified funds have a very similar internal split to the GFP with a mix of local, first-world and emerging market shares, bonds, and property trusts. This is pretty much fire-and-forget: contribute every month and they will take care of rebalancing, spreading across asset classes, and tax calculations. By my calculations the cost is very similar, the diversification is very similar, and it's much easier. The only thing they don't generally cover is a precious metals allocation, and if you want that, just put 5% of your money into the ASX:GOLD ETF, or something similar.

Why would someone want to buy an option on the day of expiry

Yes there will be enough liquidity to sell your position barring some sort of Flash Crash anomaly. Volume generally rises on the day of expiration to increase this liquidity. Don't forget that there are many investment strategies--buying to cover a short position is closing out a trade similar to your case.

Is there a generally accepted term for fractions of Currency Units?

I recently bought a stock - which was priced exactly as your question ponders, to the 1/100 cent. I happened to buy 2000 shares, but just a round lot of 100 would be enough to create no need for rounding. It's common for industry to price this way as well, where an electronic component purchased by the thousands, is priced to the tenth or hundredth of a cent. There's nothing magic about this, and you'll have more to ponder when your own lowest unit of currency is no longer minted. (I see you are in UK. Here, in the US, there's talk of dropping our cent. A 5 cent piece to be the smallest value coin. Yet, any non-cash transactions, such as checks, credit card purchases, etc, will still price to the penny.) To specifically answer the question - it's called decimal currency. 1/10, 1/100 of a cent.

Is the financial advice my elderly relative received legal/ethical?

I can't speak about the UK, but here in the US, 1% is on the cheap side for professional management. For example Fidelity will watch your portfolio for that very amount. I doubt you could claim that they took advantage of her for charging that kind of fee. Given that this is grandma's money, no consultation with the family is necessary. Perhaps she did have dementia at the time of investment, but she was not diagnosed at the time. If a short time has past between the investment and the diagnosis, I would contact the investment company with the facts. I would ask (very nicely) that they refund the fee, however, I doubt they under obligation to do so. While I do encourage you to seek legal council, there does not seem to be much of substance to your claim. The fees are very ordinary or even cheap, and no diagnosis precluded decision making at the time of investment.

Investment options in Australia

It depends on the exact level of risk that you want, but if you want to keep your risk close to zero you're pretty much stuck with the banks (and those rates don't look to be going up any time soon). If you're willing to accept a little more risk, you can invest in some index tracking ETFs instead, with the main providers in Australia being Vanguard, Street State and Betashares. A useful tool for for an overview of the Australian ETF market is offered by StockSpot. The index funds reduce your level of risk by investing in an index of the market, e.g. the S&P 200 tracked by STW. If the market as a whole rises, then your investment will too, even though within that index individual companies will rise and fall. This limits your potential rate of return as well, and is still significantly more risky than leaving your cash in an Aussie bank (after all, the whole market can fall), but it might strike the right balance for you. If you're getting started, HSBC, Nabtrade, Commsec and Westpac were all offering a couple of months of free trades up to a certain value. Once the free trades are done, you'll do better to move to another broker (you can migrate your shares to the others to take advantage of their free trades too) or to a cheaper broker like CMC Markets.

Newbie question - Brokerage and selling shares

Capital gains tax is an income tax upon your profit from selling investments. Long-term capital gains (investments you have held for more than a year) are taxed significantly less than short-term gains. It doesn't limit how many shares you can sell; it does discourage selling them too quickly after buying. You can balance losses against gains to reduce the tax due. You can look for tax-advantaged investments (the obvious one being a 401k plan, IRA, or equivalent, though those generally require leaving the money invested until retirement). But in the US, most investments other than the house you are living in (which some of us argue isn't really an investment) are subject to capital gains tax, period.

Why are US target retirement funds weighted so heavily towards US stocks?

A target date fund is NOT a world market index. There is no requirement that it be weighted based on the weights of the various world stock markets. If anything, historically (since the invention of target date funds), a 2:1 ratio is actually pretty low. 6:1 is, or was, probably more common. Just a token amount to non-US investments.

few question about debit credit and liabilities

Exactly what accounts are affected by any given transaction is not a fixed thing. Just for example, in a simple accounting system you might have one account for "stock on hand". In a more complex system you might have this broken out into many accounts for different types of stock, stock in different locations, etc. So I can only suggest example specific accounts. But account type -- asset, liability, capital (or "equity"), income, expense -- should be universal. Debit and credit rules should be universal. 1: Sold product on account: You say it cost you $500 to produce. You don't say the selling price, but let's say it's, oh, $700. Credit (decrease) Asset "Stock on hand" by $500. Debit (increase) Asset "Accounts receivable" by $700. Credit (increase) Income "Sales" by $700. Debit (increase) Expense "Cost of goods sold" by $500. 2: $1000 spent on wedding party by friend I'm not sure how your friend's expenses affect your accounts. Are you asking how he would record this expense? Did you pay it for him? Are you expecting him to pay you back? Did he pay with cash, check, a credit card, bought on credit? I just don't know what's happening here. But just for example, if you're asking how your friend would record this in his own records, and if he paid by check: Credit (decrease) Asset "checking account" by $1000. Debit (increase) Expense "wedding expenses" by $1000. If he paid with a credit card: Credit (increase) Liability "credit card" by $1000. Debit (increase) Expense "wedding expenses" by $1000. When he pays off the credit card: Debit (decrease) Liability "credit card" by $1000. Credit (decrease) Asset "cash" by $1000. (Or more realistically, there are other expenses on the credit card and the amount would be higher.) 3: Issue $3000 in stock to partner company I'm a little shakier on this, I haven't worked with the stock side of accounting. But here's my best stab: Well, did you get anything in return? Like did they pay you for the stock? I wouldn't think you would just give someone stock as a present. If they paid you cash for the stock: Debit (increase) Asset "cash". Credit (decrease) Capital "shareholder equity". Anyone else want to chime in on that one, I'm a little shaky there. Here, let me give you the general rules. My boss years ago described it to me this way: You only need to know three things to understand double-entry accounting: 1: There are five types of accounts: Assets: anything you have that has value, like cash, buildings, equipment, and merchandise. Includes things you may not actually have in your hands but that are rightly yours, like money people owe you but haven't yet paid. Liabilities: Anything you owe to someone else. Debts, merchandise paid for but not yet delivered, and taxes due. Capital (some call it "capital", others call it "equity"): The difference between Assets and Liabilities. The owners investment in the company, retained earnings, etc. Income: Money coming in, the biggest being sales. Expenses: Money going out, like salaries to employees, cost of purchasing merchandise for resale, rent, electric bill, taxes, etc. Okay, that's a big "one thing". 2: Every transaction must update two or more accounts. Each update is either a "debit" or a "credit". The total of the debits must equal the total of the credits. 3: A dollar bill in your pocket is a debit. With a little thought (okay, sometimes a lot of thought) you can figure out everything else from there.

Start Investing - France

I am not interested in watching stock exchange rates all day long. I just want to place it somewhere and let it grow Your intuition is spot on! To buy & hold is the sensible thing to do. There is no need to constantly monitor the stock market. To invest successfully you only need some basic pointers. People make it look like it's more complicated than it actually is for individual investors. You might find useful some wisdom pearls I wish I had learned even earlier. Stocks & Bonds are the best passive investment available. Stocks offer the best return, while bonds are reduce risk. The stock/bond allocation depends of your risk tolerance. Since you're as young as it gets, I would forget about bonds until later and go with a full stock portfolio. Banks are glorified money mausoleums; the interest you can get from them is rarely noticeable. Index investing is the best alternative. How so? Because 'you can't beat the market'. Nobody can; but people like to try and fail. So instead of trying, some fund managers simply track a market index (always successfully) while others try to beat it (consistently failing). Actively managed mutual funds have higher costs for the extra work involved. Avoid them like the plague. Look for a diversified index fund with low TER (Total Expense Ratio). These are the most important factors. Diversification will increase safety, while low costs guarantee that you get the most out of your money. Vanguard has truly good index funds, as well as Blackrock (iShares). Since you can't simply buy equity by yourself, you need a broker to buy and sell. Luckily, there are many good online brokers in Europe. What we're looking for in a broker is safety (run background checks, ask other wise individual investors that have taken time out of their schedules to read the small print) and that charges us with low fees. You probably can do this through the bank, but... well, it defeats its own purpose. US citizens have their 401(k) accounts. Very neat stuff. Check your country's law to see if you can make use of something similar to reduce the tax cost of investing. Your government will want a slice of those juicy dividends. An alternative is to buy an index fund on which dividends are not distributed, but are automatically reinvested instead. Some links for further reference: Investment 101, and why index investment rocks: However the author is based in the US, so you might find the next link useful. Investment for Europeans: Very useful to check specific information regarding European investing. Portfolio Ideas: You'll realise you don't actually need many equities, since the diversification is built-in the index funds. I hope this helps! There's not much more, but it's all condensed in a handful of blogs.

Does Vanguard grant admiral shares only on a per-account basis?

Yes, each of Vanguard's mutual funds looks only at its own shares when deciding to upgrade/downgrade the shares to/from Admiral status. To the best of my knowledge, if you hold a fund in an IRA as well as a separate investment, the shares are not totaled in deciding whether or not the shares are accorded Admiral shares status; each account is considered separately. Also, for many funds, the minimum investment value is not $10K but is much larger (used to be $100K a long time ago, but recently the rules have been relaxed somewhat).

Low risk withdrawal from market. Is there a converse to dollar-cost-averaging?

When you are a certain age you will be able to tap into your retirement accounts, or start receiving pension and social security funds. In addition you may be faced with required minimum distributions from these accounts. But even before you get to those points you will generally shift the focus of new funds into the retirement account to be more conservative. Depending on the balances in the various accounts and the size of the pension and social security accounts you may even move invested funds from aggressive to conservative investments. The proper proportion of the many different types of investments and revenue streams is open to much debate. During retirement you will be pulling money out of retirement accounts either to support your standard of living or to meet the required minimum distributions. What to sell will be based on either the tax implications or the required distributions that will still maintain the asset allocation you desire. If your distributions are driven by the law you will be selling enough to meet a specific required $ figure. You will either spend that money or move it into a low interest savings account or a non-retirement investment account. If trying to meet your standard of living expectations you will be selling funds that allow you to keep your desired asset allocation but still have enough to live on. Again you will be trying to meet a specific $ figure. Of course you may decide at anytime in retirement to rebalance based on changes to your lifestyle, family obligations, or winning the lottery.

Is investing in financial markets a gamble?

I read about the 90-90-90 rule aka 90% of the people lose 90% of the money in 90 days. Anything that happens in 90 days or less is speculation (effectively gambling), not investment. And the 90-90-90 thing sounds around right for inexperienced amateurs going up against professionals in that space. I don't know anyone who actually made significant amount money by investing in stocks or other financial products except those appearing in TVs. Lots and lots and lots of people do. I heard that people who actually encourage common people to invest in stocks are stock brokers and fund managers who actually gain by the fact that more people invest. No. It's true that lots of people will give you advice to by specific stocks or financial instruments that will earn them comission or fees, but the basic idea of investing in the stock market is very sound; ultimately, it's based on the ability of companies to create value and pay dividends. Could you please give some valid reasons to invest in stocks or other financial market. Thank you. Well, what else can you do with your money? Put it in an interest-bearing bank account? Effectively, you'll still be investing in the stock market, the bank is just taking most of the returns in exchange for guaranteeing that you'll never lose money even temporarily.

Best way to pay off debt?

The most tax efficient way to get some cash would be to sell some stocks from the Fidelity account that have the lowest capital gains. The tax will typically be 15% of the capital gains. This will be a one-time cost which should save you money compared to paying 7.5% on the loan year after year. Tax on selling the stock options will probably be higher, since you imply there would be high capital gains, and some of the proceeds might even be taxed as income, not capital gains.

How to buy stuff (stocks?) in IRA account? What else?

You can buy stocks in the IRA, similarly to your regular investment account. Generally, when you open an account with a retail provider like TDAmeritrade, all the options available for you on that account are allowable. Keep in mind that you cannot just deposit money to IRA. There's a limit on how much you can deposit a year ($5500 as of 2015, $6500 for those 50 or older), and there's also a limit on top of that - the amount you deposit into an IRA cannot be more than your total earned income (i.e. income from work). In addition, there are limits on how much of your contribution you can deduct (depending on your income and whether you/your spouse have an employer-sponsored retirement plan).

Distribution vs withdrawal for an investment account

A mutual fund makes distributions of its dividends and capital gains, usually once a year, or seminanually or quarterly or monthly etc; it does not distribute any capital losses to its shareholders but holds them for offsetting capital gains in future years, (cf, this answer of mine to a different question). A stock pays dividends; a stock neither has nor does it distribute capital gains: you get capital gains (or losses) when you sell the shares of the stock, but these are not called distributions of any kind. Similarly, you incur capital gains or losses when you redeem shares of mutual funds but these are not called distributions either. Note that non-ETF mutual fund shares are generally not bought and sold on stock exchanges; you buy shares directly from the fund and you sell shares back (redeem them) directly to the fund. All of the above transactions are taxable events for the year to you unless the shares are being held in a tax-deferred account or are tax-free for other reasons (e.g. dividends from a municipal bond fund).

Should I sell my stocks to put a down payment on a house before it becomes a long term investment?

In the United States Short-term capital gains are taxed at rates similar to regular income which is 25% if you make less than $91,000 and 28% if you make more than that but less than $190,000. If you make more than $190,000 then the rate is 33%. If you hold the stock for a year or more than the tax rate is 15%, unless your income is less than $33,000 in which case there is no tax on long-term gains. As a general rule, the way to make money is to stay out of debt, so I cannot advise you to assume a mortgage. Financially you are better off investing your money. Much like you I bought a house with a mortgage using about $30,000 in a down payment about 20 years ago and I paid it off a few years ago. If I had to do it over again, I would have bought a shack (a steel building) for $30,000 and lived in that and invested my income. If I had done that, I would be about $500,000 richer today than I am now.

Why do Dealers/Brokers hold Inventory in Stocks?

The difficulty is that you are thinking of a day as a natural unit of time. For some securities the inventory decisions are less than a minute, for others, it can be months. You could ask a similar question of "why would a dealer hold cash?" They are profit maximizing firms and, subject to a chosen risk level, will accept deals that are sufficiently profitable. Consider a stock that averages 1,000 shares per day, but for which there is an order for 10,000 shares. At a sufficient discount, the dealer would be crazy not to carry the order. You are also assuming all orders are idiosyncratic. Dividend reinvestment plans (DRIP) trigger planned purchases on a fixed day, usually by averaging them over a period such as 10 days. The dealer slowly accumulates a position leading up to the date whenever it appears a good discount is available and fills the DRIP orders out of their own account. The dealer tries to be careful not to disturb the market leading up to the date and allows the volume request to shift prices upward and then fills them.

How are they earning money in the movie “Trading Places”?

Sell 200 at 142. What does that mean? I haven't seen the movie, so I won't try to put anything in story context. "Sell 200 at 142" means to sell 200 units (usually shares, but in this case it would likely be gallons or barrels of orange juice or pounds or tons of frozen juice). In general, this could mean that you have 200 units and want to sell what you have. Or you could borrow 200 units from someone and sell those--this is called a naked short. In this case, it seems that what they are selling is a futures contract. With a futures contract, you are promising to obtain orange juice by some future date and sell it for the agreed price. You could own an orange grove and plan to turn your oranges into juice. Or you could buy a futures contract of oranges to turn into juice. Or you could arbitrage two futures contracts such that one supplies the other, what they're doing here. In general people make profits by buying low and selling high. In this case they did so in reverse order. They took the risk of selling before they had a supply. Then they covered their position by purchasing the supply. They profited because the price at which they bought was lower than the price at which they sold. The reason why this is necessary is that before buying the oranges, the orange juice makers need to know that they can make a profit. So they sell orange juice on the futures market. Then they know how much they can afford to pay for oranges on a different market. And the growers know how much they can get for oranges, so they can pay people to water and pick them. Without the futures markets, growers and orange juice makers would have to take all the risk themselves. This way, they can share risks with each other and financiers. Combined with insurance, this allows for predictable finances. Without it, growers would have to be wealthy to afford the variation in crop yields and prices.

College student lacking investment experience: How to begin investing money?

If you have wage income that is reported on a W2 form, you can contribute the maximum of your wages, what you can afford, or $5500 in a Roth IRA. One advantage of this is that the nominal amounts you contribute can always be removed without tax consequences, so a Roth IRA can be a deep emergency fund (i.e., if the choice is $2000 in cash as emergency fund or $2000 in cash in a 2015 Roth IRA contribution, choice 2 gives you more flexibility and optimistic upside at the risk of not being able to draw on interest/gains until you retire or claim losses on your tax return). If you let April 15 2016 pass by without making a Roth IRA contribution, you lose the 2015 limit forever. If you are presently a student and partially employed, you are most likely in the lowest marginal tax rate you will be in for decades, which utilizes the Roth tax game effectively. If you're estimating "a few hundred", then what you pick as an investment is going to be less important than making the contributions. That is, you can pick any mutual fund that strikes your fancy and be prepared to gain or lose, call it $50/year (or pick a single stock and be prepared to lose it all). At some point, you need to understand your emotions around volatility, and the only tuition for this school is taking a loss and having the presence of mind to examine any panic responses you may have. No reason not to learn this on "a few hundred". While it's not ideal to have losses in a Roth, "a few hundred" is not consequential in the long run. If you're not prepared at this time in your life for the possibility of losing it all (or will need the money within a year or few, as your edit suggests), keep it in cash and try to reduce your expenses to contribute more. Can you contribute another $100? You will have more money at the end of the year than investment choice will likely return.

Should one only pursue a growth investing approach for Roth IRAs

What asset allocation is right for you (at the most basic the percentage if stocks vs bonds; at the advanced level, percentage of growth vs value, international vs domestic etc) is a function of your age, retirement goals, income stability and employment prospects until retirement. Roth IRA is orthogonal to this. Now, once you have your allocation worked out there are tactical tax advantage decisions available: interest income, REIT and MLP dividends are taxed at income and not capital gains rate, so the tactical decision is to put these investments in tax advantage accounts like Roth and 401ks. Conversely, should you decide to buy and hold growth stocks there are tactical advantages to keeping them in a taxable account: you get tax deferment until the year you choose to sell (barring a takeover), you get the lower lt cap gains rate, and you can employ tax loss harvesting.

Relative merits of Petrobras as an investment

Could be risky, consider that some of their assets in Bolivia were nationalized.

Can we buy and sell stocks without worrying about settlement period

In the United States, regulation of broker dealer credit is dictated by Regulation T, that for a non-margin account, 100% of a trade must be funded. FINRA has supplemented that regulation with an anti-"free rider" rule, Rule 4210(f)(9), which reads No member shall permit a customer (other than a broker-dealer or a “designated account”) to make a practice, directly or indirectly, of effecting transactions in a cash account where the cost of securities purchased is met by the sale of the same securities. No member shall permit a customer to make a practice of selling securities with them in a cash account which are to be received against payment from another broker-dealer where such securities were purchased and are not yet paid for. A member transferring an account which is subject to a Regulation T 90-day freeze to another member firm shall inform the receiving member of such 90-day freeze. It is only funds from uncleared sold equities that are prohibited from being used to purchase securities. This means that an equity in one's account that is settled can be sold and can be purchased only with settled funds. Once the amount required to purchase is in excess of the amount of settled funds, no more purchases can be made, so an equity sold by an account with settled funds can be repurchased immediately with the settled funds so long as the settled funds can fund the purchase. Margin A closed position is not considered a "long" or "short" since it is an account with one loan of security and one asset of security and one cash loan and one cash liability with the excess or deficit equity equal to any profit or loss, respectively, thus unexposed to the market, only to the creditworthiness of the clearing & settling chain. Only open positions are considered "longs" or "shorts", a "long" being a possession of a security, and a "short" being a liability, because they are exposed to the market. Since unsettled funds are not considered "longs" or "shorts", they are not encumbered by previous trades, thus only the Reg T rules apply to new and current positions. Cash vs Margin A cash account cannot purchase with unsettled funds. A margin account can. This means that a margin account could theoretically do an infinite amount of trades using unsettled funds. A cash account's daily purchases are restricted to the amount of settled funds, so once those are exhausted, no more purchases can be made. The opposite is true for cash accounts as well. Unsettled securities cannot be sold either. In summation, unsettled assets can not be traded in a cash account.

Is this comparison of a 15-year vs. a 30-year mortgage reasonable?

I think your analysis is very clear, it's a sensible approach, and the numbers sound about right to me. A few other things you might want to think about: Tax In some jurisdictions you can deduct mortgage interest against your income tax. I see from your profile that you're in Texas, but I don't know the exact situation there and I think it's better to keep this answer general anyway. If that's the case for you, then you should re-run your numbers taking that into account. You may also be able to make your investments tax-advantaged, for example if you save them in a retirement account. You'll need to apply the appropriate limits for your specific situation and take an educated guess as to how that might change over the next 30 years. Liquidity The money you're not spending on your mortgage is money that's available to you for other spending or emergencies - i.e. even though your default assumption is to invest it and that's a sensible way to compare with the mortgage, you might still place some extra value on having more free access to it. Overpayments Would you have the option to pay extra on the mortgage? That's another way of "investing" your money that gets you a guaranteed return of the mortgage rate. You might want to consider if you'd want to send some of your excess money that way.

How do I do double-entry bookkeeping for separately-managed investment accounts?

For any accounts where you have a wish to keep track of dividends, gains and losses, etc., you will have to set up a an account to hold the separately listed securities. It looks like you already know how to do this. Here the trading accounts will help you, especially if you have Finance:Quote set up (to pull security prices from the internet). For the actively-managed accounts, you can just create each managed account and NOT fill it with the separate securities. You can record the changes in that account in summary each month/year as you prefer. So, you might set up your chart of accounts to include these assets: And this income: The actively-managed accounts will each get set up as Type "Stock." You will create one fake security for each account, which will get your unrealized gains/losses on active accounts showing up in your trading accounts. The fake securities will NOT be pulling prices from the internet. Go to Tools -> Securities Editor -> Add and type in a name such as "Merrill Lynch Brokerage," a symbol such as "ML1," and in the "Type" field input something like "Actively Managed." In your self-managed accounts, you will record dividends and sales as they occur, and your securities will be set to get quotes online. You can follow the general GnuCash guides for this. In your too-many-transactions actively traded accounts, maybe once a month you will gather up your statements and enter the activity in summary to tie the changes in cost basis. I would suggest making each fake "share" equal $1, so if you have a $505 dividend, you buy 505 "shares" with it. So, you might have these transactions for your brokerage account with Merrill Lynch (for example): When you have finished making your period-end summary entries for all the actively-managed accounts, double-check that the share balances of your actively-managed accounts match the cost basis amounts on your statements. Remember that each fake "share" is worth $1 when you enter it. Once the cost basis is tied, you can go into the price editor (Tools -> Price Editor) and enter a new "price" as of the period-end date for each actively-managed account. The price will be "Value of Active Acct at Period-End/Cost of Active Acct at Period-End." So, if your account was worth $1908 but had a cost basis of $505 on Jan. 31, you would type "1908/505" in the price field and Jan. 31, 2017 in the date field. When you run your reports, you will want to choose the price source as "Nearest in Time" so that GnuCash grabs the correct quotes. This should make your actively-managed accounts have the correct activity in summary in your GnuCash income accounts and let them work well with the Trading Accounts feature.

Buying shares- Stocks & Shares ISA, or Fund & Share account?

The main difference is that the ISA account like a Cash ISA shelters you from TAX - you don't have to worry about Capital Gains TAX. The other account is normal taxable account. With only £500 to invest you will be paying a high % in charges so... To start out I would look at some of the Investment Trust savings schemes where you can save a small amount monthly very cost-effectively - save £50 a month for a year to see how you get on. Some Trusts to look at include Wittan, City Of London and Lowland

Pros/cons of replicating a “fund of funds” with its component funds in my IRA?

In your entire question, the only time you mention that this is an investment inside an IRA is when you say Every quarter, six months, whatever Id have to rebalance my IRA while Vanguard would do this for the fund of funds without me needing to. Within an IRA, there are no tax implications to the rebalancing. But if this investment were not inside an IRA, then the rebalancing done by you will have tax implications. In particular, any gains realized when you sell shares in one fund and buy shares in another fund during the rebalancing process are subject to income tax. Similarly, losses also might be realized (and will affect your taxes). However, if you are invested in a fund of funds, there are no capital gains (or capital losses) when re-balancing is done; you have gains or losses only when you sell shares of the fund of funds for a price different than the price you paid for them.

GAAP for items that you both sell and make?

First, please allow me to recommend that you do not try gimmickry when financials do give expected results. It's a sure path to disaster and illegality. The best route is to first check if accounts are being properly booked. If they are then there is most likely a problem with the business. Anything out of bounds yet properly booked is indeed the problem. Now, the reason why your results seem strange is because investments are being improperly booked as inventory; therefore, the current account is deviating badly from the industry mean. The dividing line for distinguishing between current and long term assets is one year; although, modern financial accounting theorists & regulators have tried to smudge that line, so standards do not always adhere to that line. Therefore, any seedlings for resale should be booked as inventory while those for potting as investment. It's been some time since I've looked at the standards closely, but this used to fall under "property, plant, & equipment". Generally, it is a "capital expenditure" by the oldest definition. It is not necessary to obsess over initial bookings because inventory turnover will quickly resolve itself, so a simple running or historical rate can be applied to the seedling purchases. The books will now appear more normal, and better subsequent strategic decisions can now be made.

Hypothetical: can taxes ever cause a net loss on otherwise-profitable stocks?

This was the day traders dilemma. You can, on paper, make money doing such trades. But because you do not hold the security for at least a year, the earnings are subject to short term capital gains tax unless these trades are done inside a sheltered account like a traditional IRA. There are other considerations as well: wash sale rules and number of days to settle. In short, the glory days of rags to riches by day trading are long gone, if they were ever here in the first place. Edit: the site will not allow me to add a comment, so I am putting my response here: Possibly, yes. One big 'gotcha' is that your broker reports the proceeds from your sales, but does not report your outflows from your buys. Then there is the risk you take by the broker refusing to sell the security until the transaction settles. Not to mention wash sale rules. You are trying to win at the 'buy low, sell high' game. But you have a 25% chance, at best, of winning at that game. Can you pick the low? Maybe, but you have a 50% chance of being right. Then you have to pick the high. And again you have a 50% chance of doing that. 50% times 50% is 25%. Warren Buffet did not get rich that way. Buffet buys and holds. Don't be a speculator, be a 'buy and hold' investor. Buy securities, inside a sheltered account like a traditional IRA, that pay dividends then reinvest those dividends into the security you bought. Scottrade has a Flexible Reinvestment Program that lets you do this with no commission fees.

Covered call when stock position is at a loss

It's unclear what you're asking. When I originally read your question, it seemed that you had closed out one options position and opened another. When I read your question the second time, it seemed that you were writing a second option while the first was still open. In the second case, you have one covered and one naked position. The covered call will expire worthless, the naked call will expire in the money. How your broker will resolve that is a question best left for them, but my expectation is that they will assign the non-worthless calls. Whereas, if both options expired in the money, you would be assigned and you would have to come up with the additional shares (and again, that depends on how your broker works). In general, for both cases, your net is the premiums you received, plus the difference between strike price and the price that you paid for the stock, minus any cost to close out the position. So whether you make a profit is very much dependent on how much you received for your premiums. Scenario #1: close first call, write second: Scenario #2: write covered + naked, one expires worthless Scenario #3: write covered + naked, both expire in the money Disclaimer: the SEC does not consider me a financial/investment advisor, so this is not financial/investment advice

Should I re-allocate my portfolio now or let it balance out over time?

As you note, your question is inherently opinion-based. That said, if I were in your situation I would sell the stock all at once and buy whatever it is you want to buy (hopefully some index ETF or mutual fund). According to what I see, the current value of the HD stock is about $8500 and the JNJ stock is worth less than $500. With a total investment of less than $10,000, any gain you are likely to miss by liquidating now is not going to be huge in absolute terms. This is doubly true since you were given the stock, so you have no specific reason to believe it will do well at all. If you had picked it yourself based on careful analysis, it could be worth keeping if you "believed in yourself" (or even if you just wanted to test your acumen), but as it is the stock is essentially random. Even if you want to pursue an aggressive allocation, it doesn't make sense to allocate everything to one stock for no reason. If you were going to put everything in one stock, you'd want it to be a stock you had analyzed and picked. (I still think it would be a bad idea, but at least it would be a more defensible idea.) So I would say the risk of your lopsided allocation (just two companies, with more than 90% of the value in just one) outweighs any risk of missing out on a gain. If news breaks tomorrow that the CEO of Home Depot has been embezzling (or if Trump decides to go on the Twitter warpath for some reason), your investment could disappear. Another common way to think about it is: if you had $9000 today to buy stocks with, would you buy $8500 worth of HD and $500 worth of JNJ? If not, it probably doesn't make sense to hold them just because you happen to have them. The only potential exception to my advice above would be tax considerations. You didn't mention what your basis in the stock is. Looking at historical prices, it looks like if all the stock was 20 years old you'd have a gain of about $8000, and if all of it was 10 years old you'd have a gain of about $6000. If your tax situation is such that selling all the stock at once would push you into a higher tax bracket, it might make sense to sell only enough to fit into your current bracket, and sell the rest next year. However, I think this situation is unlikely because: A) since the stock has been held for a long time, most of the gains will be at the lower long-term rate; B) if you have solid income, you can probably afford the tax; and C) if you don't have solid income, your long-term capital gains rate will likely be zero.

What exactly is the profit and loss of a portfolio?

When we 'delta-hedge', we make the value of a portfolio 0. No - you make the risk relative to some underlying 0. The portfolio does have a value, but if whatever underlying you're hedging against changes slightly the value of your portfolio should not change. But, what is the derivative of a portfolio? It's the instantaneous rate of change of the portfolio) relative to some underlying phenomenon. With a portfolio of many stocks, there's not one single factor that drives the value of your portfolio. You have sensitivity to each underlying stock (price and volatility), interest rates, the market as a whole, etc. For simplicity, we might imagine a portfolio that has holdings in .... a call .... a stock .... and a bank account (to borrow and lend money). You will have a delta relative to the stock and a delta relative to the underlying instrument on the option, etc. Those can only be aggregated for each factor (e.g. if the call is an option on the same stock) Theta is the only one you can calculate for the portfolio as a whole - it will be the aggregate theta of all of your positions (since change in time is constant across all investments). All of the others are not aggregatable since they are measuring sensitivities to different phenomena.

Why would I pick a specific ETF over an equivalent Mutual Fund?

In the case of VFIAX versus VOO, if you're a buy-and-hold investor, you're probably better off with the mutual fund because you can buy fractional shares. However, in general the expense ratio for ETFs will be lower than equivalent mutual funds (even passive index funds). They are the same in this case because the mutual fund is Admiral Class, which has a $10,000 minimum investment that not all people may be able to meet. Additionally, ETFs are useful when you don't have an account with the mutual fund company (i.e. Vanguard), and buying the mutual fund would incur heavy transaction fees.

Understanding highly compensated employees within 401ks

HCE is defined as being above 120k$ or in the top 20 % of the company. The exact cutoff point might be different for each company. Typically, only the base salary is considered for that, but it's the company's (and 401(k)-plan's) decision. The IRS does not require HCE treatment; the IRS requires that 401(k) plans have a 'fair' distribution of usage between all employees. Very often, employees with lower income save (over-proportionally) less in their 401(k), and there is a line where the 401(k) plan is no longer acceptable to the IRS. HCE is a way for companies to ensure this forced balance; by limiting the amount of 401(k) savings for HCE, the companies ensure that the share of all contributions by below-HCE is appropriate. They will calculate/define the HCE cutoff point so that the required distribution is surely achieved. One of the consequences is that when you move over the HCE cutoff point, you can suddenly save a lot less in your 401(k). Nothing can be done about that. See this IRS page: https://www.irs.gov/retirement-plans/plan-participant-employee/definitions Highly Compensated Employee - An individual who: Owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2014; $120,000 if the preceding year is 2015 or 2016), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation.

Can I profit from anticipating a drop in value?

Purchasing an option to sell the stock is probably the safest bet. This gives you reasonable leverage, and your risk is limited to the cost of the option. Say the stock currently sells for $100 per share. You think it will drop to $80 per share in the next two weeks and the market thinks the price will be stable. Now, consider an option to sell one share of that stock for $95 any time within the next two weeks. The market would consider that option nearly worthless, since in all likelihood, you would lose out by exercising it (since you could just sell the share on the market for a price expected to be higher than that). You might be able to acquire that option for $5. Now, say you're right and within two weeks, the price drops to $80. Now you can purchase a share for $80, exercise the option to sell it for $95, and pocket $15. That would make you a $10 profit on a $5 investment. If you're wrong, you just let the option lapse and are out $5. No problem. In reality, you would buy a number of such options. And you wouldn't actually buy a share and exercise the option, you would just sell the option back to its issuer for $15.

Turning 30 and making the right decision with my savings and purchasing home

I love the idea of #1, keep that going. I don't think #2 is very realistic. Given the short time frame putting money at risk for a higher yield may not work in your favor. If it was me, I'd stick to a "high interest" savings account (around 1%). I don't mind #3 either, however, I'd be socking whatever you could to mortgage principle so you can get out of PMI sooner rather than later. That would be my top priority. Given the status of interest rates, you may end up saving money in the long run. I doubt it, but you may. If you choose to go with #3, don't settle for a house that you really don't like. Get something that you want. Who knows it may take you a year or so to find something!

What is the market rate of non-cash ISA fund administration fee in UK?

Is he affiliated with the company charging this fee? If so, 1% is great. For him. You are correct, this is way too high. Whatever tax benefit this account provides is negated over a sufficiently long period of time. you need a different plan, and perhaps, a different friend. I see the ISA is similar to the US Roth account. Post tax money deposited, but growth and withdrawals tax free. (Someone correct, if I mis-read this). Consider - You deposit £10,000. 7.2% growth over 10 years and you'd have £20,000. Not quite, since 1% is taken each year, you have £18,250. Here's what's crazy. When you realize you lost £1750 to fees, it's really 17.5% of the £10,000 your account would have grown absent those fees. In the US, our long term capital gain rate is 15%, so the fees after 10 years more than wipe out the benefit. We are not supposed to recommend investments here, but it's safe to say there are ETFs (baskets of stocks reflecting an index, but trading like an individual stock) that have fees less than .1%. The UK tag is appreciated, but your concern regarding fees is universal. Sorry for the long lecture, but "1%, bad."

When to use geometric vs. arithmetic mean? Why is the former better for percentages?

JoeTaxpayer nailed it. Here's another way to look at it: Generally, we invest in something, then might leave it there for a few years, then take it out, but don't touch it in between. In that case, to get the final amount X(N), we need to take the initial amount, then multiply by growth in the first year, then multiply by growth in the second year, etc. So, for three years, we have: X(3) = X(0) * G(1) * G(2) * G(3) = X(0) * "average annual growth" ^ 3 So, here, we see that we want the average annual growth to the power three equal to the product of the annual growth rates, thus, geometric mean: geometric mean = (G(1) * G(2) * G(3)) ^ (1/3) On the other hand, consider a situation where I have three investments X,Y,Z over one year. Now I have, after one year: X(1)+Y(1)+Z(1) = X(0)*G(1,X) + Y(0)*G(1,Y) + Z(0)*G(1,Z) = ( X(0)+Y(0)+Z(0) ) * "average annual growth" Now, in this case, if we assume X(0) = Y(0) = Z(0) = 1, i.e. I put equal amounts in each, we see that the average annual growth rate we want in this case is the arithmetic mean: arithmetic mean = (G(1,X) + G(1,Y) + G(1,Z)) / 3 (if we had unequal amounts at the beginning, it would be a weighted average). TL;DR:

Using GnuCash for accurate cost basis calculation for foreign investments (CAD primary currency)

You would need to use Trading Accounts. You can enable this, File->Properties->Account settings tab, and check Use Trading Accounts. For more details see the following site: http://wiki.gnucash.org/wiki/Trading_Accounts

What happens to bonds values when interest rates rise? [duplicate]

It depends a lot on your investment period and the quality of the bonds that you want to invest. For example, if you want to invest until the maturity of the bonds, and the bonds are very safe (i.e. they are not expected to default), it does not matter that the interest rate rise. That is because at the maturity of the bond it will converge to its maturity value which will be independent of the change of the interest rates (although on the middle of the life the price of the bond will go down, but the coupon should remain constant -unless is a floating coupon bond-). An option could be to invest in an ETF with short term bonds (e.g. 1 year) with AAA credit rating (high quality, so very low default rate). It won't yield much, but is more than 0% if you hold it until maturity.

Bid/ask spreads for index funds

First, what structure does your index fund have? If it is an open-end mutual fund, there are no bid/ask spread as the structure of this security is that it is priced once a day and transactions are done with that price. If it is an exchange-traded fund, then the question becomes how well are authorized participants taking advantage of the spread to make the fund track the index well? This is where you have to get into the Creation and Redemption unit construct of the exchange-traded fund where there are "in-kind" transactions done to either create new shares of the fund or redeem out shares of the fund. In either case, you are making some serious assumptions about the structure of the fund that don't make sense given how these are built. Index funds have lower expense ratios and are thus cheaper than other mutual funds that may take on more costs. If you want suggested reading on this, look at the investing books of John C. Bogle who studied some of this rather extensively, in addition to being one of the first to create an index fund that became known as "Bogle's Folly," where a couple of key ones would be "Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor" and "Bogle on Mutual Funds: New Perspectives for the Intelligent Investor." In the case of an open-end fund, there has to be a portion of the fund in cash to handle transaction costs of running the fund as there are management fees to come from running the fund in addition to dividends from the stocks that have to be carefully re-invested and other matters that make this quite easy to note. Vanguard 500 Index Investor portfolio(VFINX) has .38% in cash as an example here where you could look at any open-end mutual fund's portfolio and notice that there may well be some in cash as part of how the fund is managed. It’s the Execution, Stupid would be one of a few articles that looks at the idea of "tracking error" or how well does an index fund actually track the index where it can be noted that in some cases, there can be a little bit of active management in the fund. Just as a minor side note, when I lived in the US I did invest in index funds and found them to be a good investment. I'd still recommend them though I'd argue that while some want to see these as really simple investments, there can be details that make them quite interesting to my mind. How is its price set then? The price is computed by taking the sum value of all the assets of the fund minus the liabilities and divided by the number of outstanding shares. The price of the assets would include the closing price on the stock rather than a bid or ask, similar pricing for bonds held by the fund, derivatives and cash equivalents. Similarly, the liabilities would be costs a fund has to pay that may not have been paid yet such as management fees, brokerage costs, etc. Is it a weighted average of all the underlying stock spreads, or does it stand on its own and stems from the usual supply & demand laws ? There isn't any spread used in determining the "Net Asset Value" for the fund. The fund prices are determined after the market is closed and so a closing price can be used for stocks. The liabilities could include the costs to run the fund as part of the accounting in the fund, that most items have to come down to either being an asset, something with a positive value, or a liability, something with a negative value. Something to consider also is the size of the fund. With over $7,000,000,000 in assets, a .01% amount is still $700,000 which is quite a large amount in some ways.

US ISA equivalent for tax exempt investment & savings

As far as I know, there is no direct equivalent. An IRA is subject to many rules. Not only are there early withdrawal penalties, but the ability to deduct contributions to an IRA phases out with one's income level. Qualified withdrawals from an IRA won't have penalties, but they will be taxed as income. Contributions to a Roth IRA can be made post-tax and the resulting gains will be tax free, but they cannot be withdrawn early. Another tax-deductable investment is a 529 plan. These can be withdrawn from at any time, but there is a penalty if the money is not used for educational purposes. A 401K or similar employer-sponsored fund is made with pre-tax dollars unless it is designated as a Roth 401K. These plans also require money to be withdrawn specifically for retirement, with a 10% penalty for early withdrawal. Qualifying withdrawals from a regular retirement plan are taxed as income, those from a Roth plan are not (as with an IRA). Money can be made harder to get at by investing in all of the types of funds you can invest in using an IRA through the same brokers under a different type of account, but the contribution will be made with post-tax, non-deductable dollars and the gains will be taxed.

How does the US Estate Tax affect an Australian with investments domiciled in the US?

I don't think the location of the funds is any of your concern. You're buying a CDI, which is: Australian financial instruments The US has no jurisdiction over you, being you an Australian, so unless you own a US-based asset (i.e.: a real-estate in the US, or a US brokerage account), US tax laws shouldn't matter to you.

What is the US tax owed when gifting India Shares to my brother?

Here's an excerpt from the Charles Schwab website which I think will help evaluate your position: The simple answer to your question is no, the value of a gift of stock for gift tax liability is NOT the donor's cost basis, but rather the fair market value of the stock at the time the gift is given. So let's say you purchased 100 shares of XYZ stock at $50 a share. Your cost basis is $5,000. Now the stock is $80 a share and you give it as a gift. The value of your gift for gift tax purposes is $8,000. In 2015, you can give up to $14,000 to an unlimited number of individuals each year without paying a gift tax or even reporting the gifts. If you give over that amount to any individual, however, you must report the gift on your tax return, but you don't have to pay taxes until you give away more than the current lifetime limit of $5,430,000—for the amount above and beyond $14,000 per person per year. So in the example above, there would be no gift tax liability. However, if the stock happened to be $150 a share, the value of the gift would be $15,000. You'd then have to report it and $1,000 would be applied toward your $5,430,000 lifetime exclusion. You will need to pay a gift tax on the current value of the stock. I'm not familiar with the tax laws in India, but if your brother was in the US, he wouldn't pay taxes on that gift until he sells the stock. The recipient doesn’t have to worry about gift taxes. It's when the recipient decides to sell the stock that the issue of valuation comes up—for income taxes. And this is where things can get a bit more complicated. In general, when valuing a gift of stock for capital gains tax liability, it's the donor's cost basis and holding period that rules. As an example, let's say you receive a gift of stock from your grandfather. He bought it for $10 a share and it's worth $15 a share on the day you receive it. If you then sell the stock, whether for a gain or a loss, your cost basis will be the same as your grandfather’s: $10 per share. Sell it at $25 and you'll pay tax (at the short- or long-term rate, depending on how long he owned the stock) on a gain of $15 a share; sell it at $8 and your capital loss will be $2 a share. Ultimately, with a gift this large that also crosses international borders, you really should hire a professional who is experienced with these types of transactions. Their fees/commission will be completely offset by the savings in risk and paperwork. http://www.schwab.com/public/schwab/nn/articles/How-Do-You-Value-a-Gift-of-Stock-It-Depends-on-Whether-You-re-the-Giver-or-the-Receiver

Better to have a non-registered (taxable) investment account in one/both names and/or based on income?

It should be in the name(s) of whomever puts money in the account. When filing your taxes there will be a question or space to mark the percentage of income in each others name. If you're just looking for small amounts of income splitting, then it's legal for the higher earning spouse to pay household expenses and then the lower earning spouse can save all or some of his/her income. Whether or not to have 2 accounts or not has more to do with estate planning and minimizing account fees if applicable. It can also help in a small way for asset allocation if that's based on family assets and also, minimizing commissions.

Do the proceeds from selling an option immediately convert to buying power in a margin account?

Yes. I heard back from a couple brokerages that gave detailed responses. Specifically: In a Margin account, there are no SEC trade settlement rules, which means there is no risk of any free ride violations. The SEC has a FAQ page on free-riding, which states that it applies specifically to cash accounts. This led me to dig up the text on Regulation T which gives the "free-riding" rule in §220.8(c), which is titled "90 day freeze". §220.8 is the section on cash accounts. Nothing in the sections on margin accounts mentions such a settlement restriction. From the Wikipedia page on Free Riding, the margin agreement implicitly covers settlement. "Buying Power" doesn't seem to be a Regulation T thing, but it's something that the brokerages that I've seen use to state how much purchasing power a client has. Given the response from the brokerage, above, and my reading of Regulation T and the relevant Wikipedia page, proceeds from the sale of any security in a margin account are available immediately for reinvestment. Settlement is covered implicitly by margin; i.e. it doesn't detract from buying power. Additionally, I have personally been making these types of trades over the last year. In a sub-$25K margin account, proceeds are immediately available. The only thing I still have to look out for is running into the day-trading rules.

What's best investment option? Mutual fund or Property [duplicate]

nan

Right account for local purchases, loan EMI, and investments

What is the best and most economical way for me to pay the loan EMIs directly? (whether from a Singapore account or a NRE/NRO account) It is advisable to have it via the NRE account as this would be easier. If you already have funds in NRO account, you can use that before you use the funds from NRE account. For all expenses I make in India (e.g shopping, general expenses in India visits) what account should I be using, ideally? Is the route to transfer into NRE then NRO and then withdraw from NRO? Whatever is convenient. Both are fine. If I plan to make any investments in SIPs/Stock markets, should I link my NRE account with a demat account and directly use that? If I sell the shares will the earnings come back into NRO or NRE? You need to open a DEMAT PINS Account and link it to NRE account. You are sell and repatriate the funds without any issue from PINS account. Related question Indian Demat account

What is the best resource for determining a specific age-based asset allocation?

Look into the asset allocations of lifecycle funds offered by a company like Vanguard. This page allows you to select your current age and find a fund based on that. You could pick a fund, like the Target Retirement 2055 Fund (ages 21-25), and examine its allocation in the Portfolio & Management tab. For this fund, the breakdown is: Then, look at the allocation of the underlying funds that comprise the lifecycle fund, in the same tab. Look at each of those funds and see what asset allocation they use, and that should give you a rough idea for an age-based allocation. For example, the Total Stock Market Index Fund page has a sector breakdown, so if you wanted to get very fine-grained with your allocation, you could. (You're probably much better off investing in the index fund, low-cost ETFs, or the lifecycle fund itself, however; it'll be much cheaper). Doing this for several lifecycle funds should be a good start. Keep in mind, however, that these funds are rebalanced as the target date approaches, so if you're following the allocation of some particular funds, you'll have to rebalance as well. If you really want an age-based allocation that you don't have to think about, invest in a lifecycle fund directly. You'll probably pay a lower expense ratio than if you invested in a whole slew of funds directory, and it's less work for someone who isn't comfortable managing their portfolio themselves. Furthermore, with Vanguard, the expense ratios are already fairly low. This is only one example of an allocation, however; your tolerance of risk, age, etc. may affect what allocation you're willing to accept. Full disclosure: Part of my Roth IRA is invested in the Target 2055 fund I used as an example above, and another part uses a similar rebalancing strategy to the one I used above, but with Admiral Share funds, which have higher minimum investments but lower expense ratios.

Employer reported ESPP ordinary income on wrong year's W-2

Based on the statement in your question you think it should have been on the 2014 W-2 but it was included on the 2015 W-2. If you are correct, then you are asking them to correct two w-2 forms: the 2014 form and the 2015 form. You will also have to file form 1040-x for 2014 to correct last years tax forms. You will have to pay additional tax with that filing, and there could be penalties and interest. But if you directed them on the last day of the year, it is likely that the transaction actually took place the next year. You will have to look at the paperwork for the account to see what is the expected delay. You should also be able to see from the account history when it actually took place, and when the funds were credited to your account. or you could just pay the tax this year. This might be the best if there is no real difference in the result. Now if you added the sale to your taxes lat year without a corresponding tax statement from your account, that is a much more complex situation. The IRS could eventually flag the discrepancy, so you may have to adjust last year filing anyway.

Where do expense ratios show up on my statement?

I don't think that you'll notice a difference in the NAV in a fund with fees that are low as the Vanguard Total Stock Market Fund. Their management fees are incorporated into the NAV, but keep in mind that the fund has a total of $144 billion in assets, with $66 billion in the investor class. The actual fees represent a tiny fraction of the NAV, and may only show up at all on the day they assess the fees. With Vanguard total stock market, you notice the fee difference in the distributions. In the example of Vanguard Total Stock Market, there are institutional-class shares (like VITPX with a minimum investment of $200M) with still lower costs -- as low as 0.0250% vs. 0.18% for the investor class. You will notice a different NAV and distributions for that fund, but there may be other reasons for the variation that I'm not familar with, as I'm not an institutional investor.

Retirement Funds: Betterment vs Vanguard Life strategy vs Target Retirement

Katherine from Betterment here. I wanted to address your inquiry and another comment regarding our services. I agree with JAGAnalyst - it's detrimental to your returns and potential for growth if you try to time the market. That's why Betterment offers customized asset allocation for each portfolio based on the nature of your goal, time horizon, and how much you are able to put towards your investments. We do this so regardless of what's happening in the markets, you can feel comfortable that your asset allocation plus other determining factors will get you where you need to go, without having to time your investing. We also put out quite a bit of content regarding market timing and why we think it's an unwise practice. We believe continuously depositing to your goal, especially through auto-deposits, compounding returns, tax-efficient auto-rebalancing, and reinvesting dividends are the best ways to grow your assets. Let me know if you would like additional information regarding Betterment accounts and our best practices. I am available at buck@betterment.com and am always happy to speak about Betterment's services. Katherine Buck, Betterment Community Manager

Can my accounting for Tax Basis differ from my broker's

No. If you didn't specify LIFO on account or sell by specifying the shares you wish sold, then the brokers method applies. From Publication 551 Identifying stock or bonds sold. If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Pub. 550. The trick is to identify the stock lot prior to sale.

What's so hard about a mutual fund manager pricing their mutual fund?

Given that a mutual fund manager knows, at the end of the day, precisely how many shares/units/whatever of each investment (stock, equity, etc.) they own, plus their bank balance, It is calculating this given. There are multiple orders that a fund manager requests for execution, some get settled [i.e. get converted into trade], the shares itself don't get into account immediately, but next day or 2 days later depending on the exchange. Similarly he would have sold quite a few shares and that would still show shares in his account. The bank balance itself will not show the funds to pay as the fund manager has purchased something ... or the funds received as the fund manager has sold something. So in general they roughly know the value ... but they don't exactly know the value and would have to factor the above variables. That's not a simple task when you are talking about multiple trades across multiple shares.

What do do with traditional IRA if I'm maxing out contributions to employer 401k and want to open a Roth

You have many options, and there is no one-size-fits-all recommendation. You can contribute to your IRA in addition to your 401(k), but because you have that 401(k), it is not tax-deductable. So there is little advantage in putting money in the IRA compared to saving it in a personal investment account, where you keep full control over it. It does, however, open the option to do a backdoor-rollover from that IRA to a Roth IRA, which is a good idea to have; you will not pay any taxes if you do that conversion, if the money in the IRA was not tax deducted (which it isn't as you have the 401(k)). You can also contribute to a Roth IRA directly, if you are under the income limits for that (193k$ for married, I think, not sure for single). If this is the case, you don't need to take the detour through the IRA with the backdoor-rollover. Main advantage for Roth is that gains are tax free. There are many other answers here that give details on where to save if you have more money to save. In a nutshell, In between is 'pay off all high-interest debt', I think right after 1. - if you have any. 'High-Interest' means anything that costs more interest than you can expect when investing.

Do I need to be proactive about telling the tax man (HMRC) I earn more than the child benefit threshold?

unregister for child benefit but apparently If I do that then my wife will stop getting the automatic national insurance stamp each year and will lose years of state pension You probably got this wrong according to Citizen's Advice. You can choose not to receive any Child Benefit, if you don't want to pay the extra tax. However, HMRC is encouraging you to still fill out a Child Benefit claim form even if you choose not to actually receive any Child Benefit payments from them. This is because filling your claim form for Child Benefit can help you build up national insurance credits which can help protect your future state pension. This is particularly important if you've stopped work to look after children full time. It can also help protect your entitlement to other benefits such as Guardian's Allowance, and ensure your child is automatically issued with a National Insurance number before their 16th birthday. Completing a Child Benefit claim form will make it easier for payments to start again if your circumstances change and your income falls below the £50,000 limit. As for Self Assessment If you decide to continue getting Child Benefit, you'll have to fill in a self-assessment tax return. This is when you'll have to declare you were getting Child Benefit and pay the extra tax, known as the High Income Child Benefit Charge. You'll have to register for self-assessment if you are not already registered. You can choose to pay the tax charge either: The following is important though:- It is your responsibility to pay the extra tax, even if you don't hear from HMRC. SOURCE

When entering a Futures contract, must the margin deposit be idle or can I profit from it?

In theory, an FCM may accept various types of collateral, including assets such as cash, treasuries, certain stocks, sovereign debt, letters of credit, and (as of 2009, I think,) gold. In practice, most will want you to post cash or cash. Some will take treasuries, but I think you'll generally have a hard time posting securities or other riskier asset classes at most shops, as dealing with the margining around them is more complex (and less profitible).